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Carlyle acquires J&J unit, joins others in making purchases in the New Year

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January 16
9:39 PM 2014

Private equity firm Carlyle is one of the latest companies making purchases as 2014 starts to roll with its acquisition of a Johnson & Johnson unit for a price tag of $4.15 billion, the Financial Times reported. Apollo Global Management, another private equity firm, also revealed that it had taken over CEC Entertainment, the company that owns the restaurant chain Chuck E. Cheese, the report added.

Carlyle bested other strategic acquirers as well as investment companies in its bid to purchase the ortho-clinical diagnostics business from the healthcare giant. Included with the purchase is the blood testing equipment unit. An active investor in the healthcare segment, Carlyle is also an owner of drug trials company PPD and the nursing home chain Manor Care which it purchased seven years ago. The report said the debt markets will provide $3.3 billion to finance the deal.

The private equity company based in Washington, DC plans to make significant investments in the operations and intends to grow the business into different markets, both developed and emerging.

FT reported that buyout firms possessing substantial cash piles and access to cheap debt have not been too happy at the reluctance of bid targets to put themselves on the auction block. For instance, Apollo was able to close its newest fund last week with $17.5 billion. However, private equity insiders and investors expressed concerns if the fund will be able to deploy the capital in enough opportunities to get back substantial returns.

The sudden spate of deals is caused by a combination of factors, the report said. One of these is that after the equity markets' 30% increase last year, a lot of firms now feel that their shares are already valued fairly. This leads company leaders to think that now would be a good time to leverage their shares as currency to make purchases. Together with this feeling is the belief that the peak of deals is now and that their shares won't be valued as much to a predator in the future, the report said.

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